Fossil Fuel Producers Must Begin to Work Together

By Jason Hayes, American Coal Council

In February 2011, I spoke at the Fifth Annual Energy Forum and Expo in Grand Junction, CO. As I ran through my presentation, I listed some of the pressures being applied to the U.S. coal industry. I also made sure to caution the many members of the natural gas industry that were present to restrain their schadenfreude over the coal industry’s current challenges. In the best of scenarios, I warned, they would have only a few short years before they began to experience the same destructive attacks.

I reiterated that same theme when I spoke as part of the Clean Air Act Panel at the 2015 Wyoming Energy Summit in Casper, WY. After describing the growing list of pressures being placed on the coal industry by increasingly extreme regulatory agency actions and powerful environmental groups, I also exFossil Fuel Producers Must Begin to plained how pressure being put on coal was about much more than coal. I noted that this pressure is about fundamentally changing the North American way of life and similar pressure was already now extending to other fuels.

I have been predicting for many years that, should government regulators and members of the extreme green industry – Sierra Club, NRDC, Greenpeace, and others – ever feel sufficiently comfortable in their ability to impede the coal industry’s ability to compete, they would turn their attention toward the people in the oil and natural gas industry. I have warned that, when the change in attitude occurred, natural gas would cease to be described as a “valuable transition fuel” and would begin to be disparaged as a danger and despoiler.

have also cautioned that allowing their product to be portrayed as a “transition” was admitting defeat before they even set foot on the field. Rather than focusing on the many and easily recognized benefits of affordable, abundant, reliable, domestic fossil fuel energy, by willingly taking on the moniker “transition fuel,” gas producers were stating that their product is only slightly less dangerous than other options rather than promoting gas as an essential energy resource, just like coal.

Unfortunately, my predictions are coming true and, due to this coordinated pressure directed against all fossil fuel producers, I am increasingly convinced that it is time for energy producers to recognize that we are being targeted for a slow demise. It is time for fossil fuel producers to work together to push back against this overweening, moneyed, and powerful anti-industry force we are all facing.

My concerns about natural gas being the next target were proven at least partially correct when Sierra Club was found to have accepted some $26 million in “secret” donations from natural gas producer Chesapeake Energy between 2007 and 2010. Sierra Club executives had used this windfall to bankroll their “Beyond Coal” campaign. However, when Time Magazine broke the story of senior Sierra Club executives castigating fossil fuels publicly while quietly filling the corporation’s bank accounts with fossil dollars, current Executive Director, Michael Brune, set about to cover over the group’s enviro-faux pas by distancing himself from past fundraising activities and refusing future donations from Chesapeake.

He could afford to do so as Sierra Club accounts were flush with $50 million in new funding from anti-coal activist and former New York mayor Michael Bloomberg. With Bloomberg’s millions in hand, Brune and Co. established their “Beyond Natural Gas” campaign, which, almost overnight, began to attack the former “transition fuel” and ally as “dirty, dangerous, and run amok.” Today the Sierra Club website attacks natural gas producers for taking part in “‘fracking,’ a violent process that dislodges gas deposits from shale rock formations,” a process that Sierra Club claims “contaminates drinking water, pollutes the air, and cause(s) earthquakes.”

Of course they are not alone, other green groups also attack natural gas as exposing the world to “climate risks” and calling it an economic “gamble” due to its “steadily falling” prices.

But it isn’t just the green groups that are moving against gas now; EPA has actively joined in. When proposed in June 2014, EPA’s Clean Power Plan appeared to rely heavily on natural gas to meet its ambitious reductions of greenhouse gases. Many thought that this plan meant gas would escape the pressures being place on coal, but the final plan, released on August 3, 2015 treats gas as a transition fuel (where have we heard that before?), providing strong incentives for power producers to move away from coal, toward gas in the early years of the plan, and then away from gas, toward renewables as the plan settles into place.

Furthermore, only two weeks after finalizing the Clean Power Plan, the EPA issued a proposed new source performance standard (NSPS) regulation to limit the emissions of methane and other pollutants from new sources being constructed by the oil and gas sector. With this new plan, the EPA is pushing to reduce methane emissions from this sector by 40-45 percent from 2012 levels by 2025. This rule would also extend regulation to some existing sources. For example, a Van Ness Feldman review of the regulation indicates, “the proposed revisions (to a 2012 NSPS rule covering only emissions of VOCs) would require hydraulicallyfractured oil wells to meet the same requirement for ‘green completions’ as currently applies to gas wells.” The revisions of the 2012 rule would also limit methane and VOC emissions from “new and modified pneumatic pumps … compressors and … controllers used at transmission compressor stations and storage facilities.”

EPA is also pushing for a voluntary program, which would have oil and gas producers track their own emissions and make “ambitious near-term commitments to reduce emissions from their existing facilities.” This initial step is part of the Obama administration’s efforts to achieve the goals established in the President’s “Climate Action Plan.”

Targeting the entire oil and gas sector in his early remarks, President Obama announced in January 2015 that that the oil and gas sector would need to reduce its methane emissions by 40-45 percent from 2012 levels by 2025. Clearly, the NSPS rule, issued under Section 111(b) of the Clean Air Act to limit methane and volatile organic compounds from new and modified/reconstructed production equipment is only a first step. The industry can (and should) be prepared for more rules to be proposed in this area as industry experts believe that Section 111(d) of the Clean Air Act would require the EPA to follow up with a rule covering existing sources of methane.

These latest regulations have been proposed even though EIA data shows domestic oil production nearly doubling and natural gas production increasing by about 50 percent since 2005. Over that same period, EPA numbers indicate that industry innovation has reduced methane emissions from this sector by 15 percent, while methane emissions from fracked wells have decreased 79 percent. By setting the baseline for methane reductions at 2012, this new rule will ignore the reductions from the previous seven years.

As Christopher Guith, senior vice president for policy at the U.S. Chamber’s Institute for 21st Century Energy argued, “Additional regulations on methane by EPA and other agencies are a solution in search of a problem, and only add to the difficult market conditions that are already hampering the sector.”

As the extreme green movement continues to misrepresent and malign coal-fueled energy, the EPA has ladled out an impressive weight of new, unnecessary, expensive, and burdensome regulation and red tape. This administration’s latest regulations aimed at the gas industry appear to be a continuation and intensification of their aggression toward fossil-fueled energy. Clearly fossil fuels – not just coal – are now the target and it is past time that fossil fuel producers worked together to push back against this regressive and destructive agenda.